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Tuesday, August 24, 2010

all or nothing?

Over the last few days a story first picked up on EUobserver, then Austrian daily Wirtschafts Blatt and again today on Euractiv looks at the future of EU cohesion (also referred to as regional or structural) policy in the upcoming EU budget negotiations.

The current interest was sparked by a letter to the Commission, penned by Poland, Hungary, Slovakia and the Czech Republic, calling for the European Social Fund (one of the cohesion policy's funding streams) to remain intact. In addition, a recent Polish government policy paper reportedly told its diplomats to ensure that the EU's €50bn a year cohesion spending remains untouched.

The articles all present the debate in stark terms. For example, the EUobserver piece says:

One contact noted there is a danger that the bogeyman of "renationalisation of regional development" - the theory that each EU country should look after its own poor instead of creating a joint pot - could raise its head in the EU budget talks due to the politically painful austerity measures coming into effect across the union.

However, when it comes to regional spending there is no reason for there to be an 'all or nothing' choice. As we have arguedbefore almost half of the EU's regional spending is spent in the richer member states (those with a GDP 90% or higher than the EU average) and much of this spending represents poor value for money, due to the prescriptive top-down rules governing its expenditure.

Repatriating this spending is not the same as abolishing cohesion policy altogether. There is an obvious deal by which countries with 90% or less of average EU GDP continue to receive the funding until they catch up. This should be the goal of cohesion policy after all - to allow those poorer member states to catch up with the richer ones. Once they have done so, they should take on the responsibility of funding their own poorer areas.